TREND ANALYSIS LLC

INTERMEDIATE TERM OUTLOOK

noreply@blogger.com (Currents of Emotion) — Fri, 27 Jun 2008 03:38:00 +0000

Wheat - Close Out All Long Positions

noreply@blogger.com (Currents of Emotion) — Fri, 27 Jun 2008 03:25:00 +0000

If you have continued to hold your long positions in wheat then now is the time to liquidate these positions as we have a clear 5 waves up and a strong gap with a bearish reversal today.

Aggressive speculators can even look to establish short positions as wheat looks poised for a substantial pullback right here.

General Motors - When Stockholders Feel Like Puking

noreply@blogger.com (Currents of Emotion) — Fri, 27 Jun 2008 03:12:00 +0000

What do you get when you cross extremely high volume with an extreme gap lower move?

Well, in General Motors case, you get some very high odds that a panic low has been put into place. If we follow historical precedence of past GM stock behavior then this is exactly what has been the case in a vast majority of cases.

Today saw exactly this action and because of this historical precedence, which constitutes 80% of the technical work I do, it is a fairly safe time to enter into GM on the long side.

Now I know it will be really hard for many of you to pull the trigger on this one, for no other reason than the drubbing the stock has taken over the last 6 months and especially the last 2 weeks. However, it is exactly this "I have to be crazy" feeling we get that many times will tell us that the bloodbath is over and it is safe to go back into the water.

This play should be good for at least a 38% retrace move which translates into 10 to 12 points on the stock, with an outside chance at a 50% retrace move which translates into a 15-17 point move. With the downside being very limited at this point and the strong upside potential and a possible double on the stock price, the risk reward ratio is on our side.

There are a few ways to play this.
1. Call Options out at least 3 months and at or just out of the money.
2. Leap Call Options out at least 12 months and at the money.
3. Outright purchase of the stock.

Myself, I will be doing number 1 and number 3 and I really only anticipate a shorter holding period.

Equity Market Comment - 6/27/2008

noreply@blogger.com (Currents of Emotion) — Thu, 26 Jun 2008 22:51:00 +0000

While my short term market calls have been something to be desired over the last week and a half, it is always nice to see the bulk of ones portfolio hedged against market moves such as we have seen this week. The market moves lower and our portfolios remain virtually unchanged!

On the Aggressive short term front, our stop loss order have been getting a workout as I have been trying to go long in here for some type of bounce. As you can see this supposed bounce has yet to materialize, but once again it is strong evidence that protective stop loss orders are essential when short term trading.

Once again there is evidence that a short term low in being put into place and there may be an opportunity on the long side. However, given the downside momentum I am going to wait for any aggressive long side plays.

Intermediate and Long Term investors should be smiling from ear to ear knowing that they are hedged during this entire decline.

For the very aggressive there is a nice value play in General Motors right here and I will go more into detail on this in a new post.

For Intermediate and long term traders, keep your hedged positions in place and should some type of counter trend rally develop, use the strength to reduce your exposure even more as the real fireworks to the downside have yet to begin.

Equity Market Comment - 6/24/2008

noreply@blogger.com (Currents of Emotion) — Tue, 24 Jun 2008 23:16:00 +0000

We are starting to see the short term volatility that is indicative of a market attempting to put short term low into place. Today was a good example of such activity.

It is a good time for short term short sellers to cover their positions and take some very handsome profits. From here, aggressive traders should look for a spot to establish some short term call options or long equity positions.

Intermediate and Long Term Traders should continue to be extremely defensive with an equity allocation of no more than 35%. If you did not scale back your equity exposure yet, then this rally will allow you to do so before the final leg lower comes our way and final bear market moves lower are very typically bloodbaths so be prepared.

Equity Market Comment - 6/24/2008

noreply@blogger.com (Currents of Emotion) — Mon, 23 Jun 2008 23:36:00 +0000

The cash S&P 500 has reached the wedge downside target that I had discussed last week and has done so in a manner that is consistent with the current move being over or very nearly over.

With this in mind, if you have had put options or short positions in place for this decline, now is a good time to take your profits on them and simply sit on the sidelines until we get a stronger confirmation of this move lower being over. When we get this confirmation, then aggressive short term traders can look to establish long positions for the forthcoming counter trend rally.

Intermediate and Long Term traders should remain in their extremely defensive posture as this bear market continues. During the course of this bear market we will have periods of rally and at times very sharp rallies that begin to fool the masses into thinking the worst is over. Of course once we get a vast majority of players believing that this is the case and positioned on the long side of the market, we will know that another sharp leg lower is in the mix.

10 Year Note Yields

noreply@blogger.com (Currents of Emotion) — Fri, 20 Jun 2008 01:06:00 +0000

The yield on the 10 year notes made it up to the 50% retrace level and was turned away as you can see on the weekly chart below.

This tells us that we are going to see rates move lower and at the very least a 50% move of the most recent uptick and an outside shot of rates moving to new lows.

This is where I would park my money that currently is on the sidelines with the continuing bear market.

Wheat Stop Update

noreply@blogger.com (Currents of Emotion) — Thu, 19 Jun 2008 23:47:00 +0000

Tighten up your stop loss on Wheat to a 20% profit level above your purchase price.
This will replace the breakeven stop on the second half of the position.

The breakeven point is simply to far away to justify a stop placement, so lets lock in at least a 20% profit on the remaining half of the position.

Wheat has reached a pinnacle where it is most likely going to move in one direction or the other in a sharp quick manner so stay alert.

NSC - Call Options For Aggressive Traders

noreply@blogger.com (Currents of Emotion) — Thu, 19 Jun 2008 23:35:00 +0000

Even in the middle of a bear market there will come opportunities on the long side and although they must be categorized as aggressive because of the condition of the overall equity market, they still offer some great profit potential.

Norfolk Southern made a very bullish Morning Star or Birth pattern today and was able to use the 50 day moving average as a launching pad for a possible move higher. The 50 day moving average as you can see, has been a good support level for the stock and until dis proven, it will remain a price level to look for an upward push in price.

The best way to play this will be to purchase July Call Options that are right at the money, which would be the 65.00 call options, currently selling for $250 per contract, each contract will allow you to control 100 shares of the stock. You can do the math on the leverage.

A protective stop should be put into placed based upon the underlying stock.
If you see the stock close below the low point of the Morning Star pattern (61) then all bets will be off and your call options should be liquidated.

For those of you who wish to learn how to calculate what the option price will be given this scenario of the price moving below $61, drop , me a line and I will explain it to you.

You can also research the Delta of an option and find out how to calculate this as well.

Equity Market Comment - 6/19/2008

noreply@blogger.com (Currents of Emotion) — Thu, 19 Jun 2008 23:00:00 +0000

We were a bit early on our call that a short term low had been put into place, as there was the outside shot of one last push to new lows for the move, which was satisfied today. Being early on a risky long call in a bear market is just simply proof once again that it is no feat for the faint of heart to put a bullish position into place in the midst of a bear market.

This is where we stand yet again, as the chart clearly dictates that there are strong signs that this leg lower on a very small time frame has completed and we should see some type of counter trend rally, perhaps into the 1385 to 1398 area on the S&P 500 cash index.

However, as was the case with the last potential bottom, these counter trend trades on the long side are really only for the more experienced trader and should be left on the table by the novice and even the intermediate skilled trader. The novice short term trader should be looking to sell strength which means that if in fact we do see this counter trend rally, the novice trader will look to sell it short playing the trend and leaving the counter moves to the experienced.

On the intermediate term front, we remain in a bear market and each progressive counter trend rally should get smaller and shorter in duration as we work our way lower to the final destination of a bear market low. In the meantime, intermediate and long term traders should stick to our very conservative equity allocation of no more than 35% into stocks and the remaining in cash and bonds.

WHEAT - Continues Its Strong Rally, But May Be Getting Tired

noreply@blogger.com (Currents of Emotion) — Tue, 17 Jun 2008 23:52:00 +0000

The long trade in wheat has paid off very nicely and it has racked up some very nice profits.

The chart however is just starting to show some early signs of exhaustion and while this may be nothing more than a very short term pullback forthcoming, it is enough to warrant selling half the long position and moving the stop up to your break even point on the remaining half.

Should a decline develop and only be of a short duration, then we may entertain putting the second half of the position back into force, but for now, lets enjoy some of the very nice profits we have amassed and protect the remaining lot with a no risk break even sell order.

Equity Market Comment - 6/17/2008

noreply@blogger.com (Currents of Emotion) — Tue, 17 Jun 2008 23:35:00 +0000

The market action today followed the script almost to a tee as it offered an excellent day trading set up with a very strong pre-opening market on a day that had some very high odds of being a down day. It is these types of set ups that offer some very low risk entry points and a fairly stress free trade.

Currently it looks as if we should finish our counter trend rally this week after the textbook pullback today. There are several measurements that signal 1385-1390 basis the S&P 500 cash as a very strong level of resistance, including the 200 period moving average on the hourly chart.

Short term traders can look to play this potential rally as it offers about 35 points potential, but as always, be very careful on the long side as anything can happen in a bear market such as we are currently in the midst of. Probability dictates one more move higher to the 1385 level before we continue our move lower but long positions here must be made with true levels of caution and very tight stop loss levels.

For those intermediate term traders that have yet to either establish a longer term short position or hedge their equity holdings, consider the move back to 1385 as yet another gift as the next move lower should be quite a bloodbath and one that should keep the masses perplexed as to the reason or nature of the decline.

Long term traders should continue to exercise the same level of caution that has been warranted since the start of this bear market and keep a very conservative equity allocation of no more than 35%.

EQUITY MARKET COMMENT - 6/16/2008

noreply@blogger.com (Currents of Emotion) — Mon, 16 Jun 2008 23:46:00 +0000

Remember, we are only looking for a counter trend rally in here before yet another sharp sell off.

Currently it appears that the market is quite close to the 50% and 62% upside targets for the counter trend rally, so if you had planned on playing the rally now is not a good time to even make this attempt.

On the ultra short term trend, the market movement and the days close indicate a high probability of Tuesday being a down day. Not the start of the next leg down, but a tradeable move on the short side just the same. Look for the week to have a general upward bias as we complete the counter trend rally in the 1375 to 1387 area on the cash S&P 500.

Intermediate term traders will be looking to get short once again once these price levels have been obtained. If you still have some volatile issues on the long side of your portfolio then use the muted strength we may see this week to either sell them outright or hedge them with options.

The main focus here is that the market remains mired in a bear market and until we see signs otherwise, we need to trade it as such by selling strength and being very careful if we try and trade the counter trend rallies.

OPPORTUNITY KNOCKS ON EITHER SIDE OF THIS STOCK

noreply@blogger.com (Currents of Emotion) — Sat, 14 Jun 2008 21:30:00 +0000

Equity Market Comment - 6/14/2008

noreply@blogger.com (Currents of Emotion) — Sat, 14 Jun 2008 21:06:00 +0000

Friday seems to have some very high odds of a short term low put into place with the move into the 1330 area on the cash S&P 500. The weekly chart below also shows a fairly decent reversal in prices and we closed the week out basically where we began which is quite a feat considering the heavy selling we experienced.

Now, as bullish as all this may seem, we need to keep all this in perspective and continue to treat all rallies as highly suspect and nothing more than a rally in a bear market. With this mindset in place, we need to watch the 1385 to 1400 area on the S&P 500 for a possible termination of a bear market rally.

Continue to use all rallies as a place to hedge your long term positions as we remain in the sell strength mode. Aggressive traders can look to purchase SPY call options at or near the open on Monday as long as we do not get a large gap up at the open. If we get this type of open then speculators will be looking to simply sell short or buy puts at the upside targets I mentioned earlier.

Equity Market Comment - 6/12/2008

noreply@blogger.com (Currents of Emotion) — Thu, 12 Jun 2008 21:30:00 +0000

It continues to appear as if the market is attempting to put some type of short term low into place but seems to be a bit more difficult that it usually is. We need more confirmation of this low before aggressive traders can even think about playing the possible rally which could be 30 to 40 points on the S&P 500.

Short term traders should currently be 75% flat in their trading account and still be holding a 25% short or put option position. The reason I continue to hold onto this 25% on the short side is the fact that Fridays have become the most negative day of the week and there is also an outside chance that this leg down we are currently in will be a 1.618 ratio and not just an equal length.

WHEAT - Capture Some Profits

noreply@blogger.com (Currents of Emotion) — Thu, 12 Jun 2008 04:04:00 +0000

Wheat continues its very sharp rally off of the break out of the wedge pattern we discussed last week.

Today saw a huge move, enough so to warrant taking half the long position off the table and letting the second half ride. This type of trade is the absolute best as it offers a no risk proposition.

Wheat looks a bit over extended here and may be in need of a pullback before it can continue the current rally phase. If you went long on the buy signal, then look to exit half your position and move the stop loss up to break even on the last half. This will guarantee you a very handsome profit even if wheat works its way lower to your entry point.

I am looking for a pullback to the 8-8.50 level before we have another leg higher so keep these numbers in mind going forward.

Don't forget also that Wheat is not only producing nice profits for us but it also managed to tell us to exit our short positions in soybeans at break even so we owe quite a bit of gratitude to the grain.

noreply@blogger.com (Currents of Emotion) — Wed, 11 Jun 2008 23:37:00 +0000

Ford follows the market today and closes a bit lower, but still remains in a very close proximity to a short term low. Aggressive traders can purchase call options and traders who have rode the stock lower on puts or short sales should definitely look to take their profits on their entire position.

USU now looks like it needs one final push lower below $6.10 before it can complete its first leg down. From that point, I would look for a counter trend rally to retrace 50 to 62% of the decline.
USU will become another shorting opportunity once a counter trend rally has been exhausted.

Oracle has finally started to move nicely with a very sharp move lower today.
The ultimate downside target remains 21.50, but taking 1/2 your position off the table with some nice profits would not be a bad idea.

First Bancorp is rapidly turning into a very nice short sale.

Yet again, another recommendation that you may want to take 1/2 to 3/4 of your position off the table with some excellent profits.

The chart shows the ultimate downside target.

Equity Market Comment - 6/11/2008

noreply@blogger.com (Currents of Emotion) — Wed, 11 Jun 2008 21:33:00 +0000

Today is a clear cut example of the dangers of trying to capitalize on the long side during a bear market. Although we had some fairly strong signals that today should be an up day, the power of a secular bear market is the deciding factor. It is this type of environment that requires a selling of strength and adding to short positions as the prudent course of action.

The chart below is the wedge pattern I had spoken about last week and it looks like the S&P 500 cash index is getting quite close to the wedge target of 1315.

We also have a 1.618 ratio target of 1300 even for a downside target as well, so it would appear that we may very well be getting close to some type of short term low that could lead to a trade able rally. However, as I stated in the first paragraph, during a bear market we need solid evidence that a counter trend rally is indeed a higher probability and from this point we can look to establish some type of long positions to capitalize on such a move.

At the very least, these signals warrant our short and put positions to be reduced and/or closed out in waiting for a point to re-short the market after a counter trend rally. Our short positions have paid off very nicely and it looks like there should be just a bit more on the downside before we exit these positions. I anticipate exiting 2/3's of my positions on any early weakness Thursday as the daily trading pattern calls for a continuation of lower prices early Thursday with the final low being put into place in the 11:00am to 12:00 Noon time frame. Should we see the 1315 to 1300 price level during this time then I will exit all of my speculative shorts and remain neutral until I get strong confirmation that in fact a short term low has been put into place.

Intermediate term traders should continue to hold their hedged positions as should longer term investors. This decline in full could very well be a long ways from being over. Caution remains the most prudent word for equity allocation at this time.

Wheat - Possible Sharp Move Higher In the Cards

noreply@blogger.com (Currents of Emotion) — Tue, 10 Jun 2008 23:38:00 +0000

After breaking out of its wedge consolidation, wheat has struggled to move further in the direction of its break higher.

Today was one of the first signs that it may want to work higher as it managed to find some resting support off the 50 period moving average.

With this new formation I am going to initiate a 50% long position in wheat with a tight stop loss just below the 50 day moving average.

Stock Selections Update

noreply@blogger.com (Currents of Emotion) — Tue, 10 Jun 2008 21:28:00 +0000

FBP continues to work lower and increase our profit on both the put options and also the short sales.
I am still looking for a minimum downside target of 8 1/4, but there certainly no law agains taking half your profits at current levels and letting the other half ride.

Ford has reached a very low risk entry point on the long side as we clearly have 5 waves down which typically is a pre-cursor to a short term low.

While I was a little early in the original buy signal at $6.40, we have reached a point that can safely be used to purchase another block of stock and/or purchase call options.

Oracle has not declines as quickly as I had anticipated, but it remains clearly in a downtrend an has yet to reach its minimum target level which I have marked on the chart.

LXU has made a move higher, but has yet to reach its downside target and seems to be setting up for a symmetrical move lower to my initial target of $16.

USU has retreated a full 10% since the initial sell signal, but appears to be mustering up some energy for its first counter trend rally of this decline. If you are short or have purchased put options then now may be a good time to take those profits and wait for another point in price to enter the short side again.

Equity Market Comment - 6/10/2008

noreply@blogger.com (Currents of Emotion) — Tue, 10 Jun 2008 20:38:00 +0000

I will continue to use this trading pattern which has been extremely accurate until it begins to break down in its accuracy.

The last two days of market action have shown exactly how indecisive current market participants are with both the Open and Close for the day being very close in price. These patterns are known as a Doji and are clear examples of a market that is stuck in a battle of bulls and bears, each fairly evenly matched.

Today also saw and inside day with a down close on the S&P 500 cash index, which should lead to a rally on Wednesday. However, this rally should be used as a selling point or an area to purchase put options as the current decline has not come even close to showing any sign of exhaustion.

The trading pattern that I have posted over the last couple of weeks on the Wilshire 5000 remains very much in play and as I have marked on the chart above, you can plainly see where we currently are in the sequence and also how accurate the pattern remains.

In a nutshell, we remain in a sell strength trading mode and continue to look for small rallies along the way to add to our short positions. Your equity allocation should be extremely defensive.

Equity Market Comment For Closing of 6/9/2008

noreply@blogger.com (Currents of Emotion) — Tue, 10 Jun 2008 03:00:00 +0000

The Indecision that the market displayed today sends us a message that indeed we are in the midst of a new leg down in an ongoing bear market, but also that on a very short term basis we may be nearing a short term low.

I have targets in the 1345 area basis the S&P 500 cash index that should present some type of support for the market. This however should prove to be nothing more than a point of a small counter trend rally before the decline pushes lower once again.

The 1345 area is a good target for those who have been holding SPY put options to exit their positions and await a point to sell any strength once again.

The NASDAQ has finally broken down with a penetration of its lower channel.
The OTC market had been one of the slight glimmers of hope that in fact the market could rebound in a more aggressive manner, but all this has been dashed with the breaking of the lower trend channel.

As stated above, we may be nearing a very short term low after we see one more push lower in stock prices. Use this potential strength however to sell short, hedge or buy SPY put options as sharply lower prices seem to be in the cards over the intermediate term.

Wheat - Saves Us From Loss

noreply@blogger.com (Currents of Emotion) — Fri, 06 Jun 2008 03:03:00 +0000

We have to give a hats off to Wheat which gave us an early warning signal on our short position in Soybeans.

This is exactly why it is important to follow the entire complex and not simply the one commodity you are interested in trading.

Currently the Beans have broken out of their wedge pattern and should continue to move higher. I have not entered into a long position as of yet as I am going to await a small pullback to the upper line on the wedge pattern. Take a look at the chart.

Pattern For Fridays Trading

noreply@blogger.com (Currents of Emotion) — Fri, 06 Jun 2008 02:54:00 +0000

I did want to touch on the projected trend for Friday for those short term traders that utilize this data.

The pattern calls for a choppy, but higher morning session with the days high being made in the 1pm est. time frame.

From this high, there should be a very extensive decline that will catch many unaware as they participate in what they deem to be a follow through day of Thursday.

So, for those who did not get short near the close today, use any strength we may see in the morning as an opportunity to establish a position. This will be especially true if we see a run up in prices because of a good Jobs Report number which is due out at 8:30am est. Lately, this has been an excellent point to take advantage of either emotional buying or emotional selling as the market has had a very strong tendency to move counter to the morning move for the rest of the day.

So, you have a double barrel to look for here.

1. Strength into 1pm - Buy Puts

2. Strength off the Jobs Report - Buy Puts

********TREND ANALYSIS LLC********

INTERMEDIATE TERM OUTLOOK

Wheat - Close Out All Long Positions

General Motors - When Stockholders Feel Like Puking

Equity Market Comment - 6/27/2008

Equity Market Comment - 6/24/2008

Equity Market Comment - 6/24/2008

10 Year Note Yields

Wheat Stop Update

NSC - Call Options For Aggressive Traders

Equity Market Comment - 6/19/2008

WHEAT - Continues Its Strong Rally, But May Be Getting Tired

Equity Market Comment - 6/17/2008

EQUITY MARKET COMMENT - 6/16/2008

OPPORTUNITY KNOCKS ON EITHER SIDE OF THIS STOCK

Equity Market Comment - 6/14/2008

Equity Market Comment - 6/12/2008

WHEAT - Capture Some Profits

Equity Market Comment - 6/11/2008

Wheat - Possible Sharp Move Higher In the Cards

Stock Selections Update

Equity Market Comment - 6/10/2008

Equity Market Comment For Closing of 6/9/2008

Wheat - Saves Us From Loss

Pattern For Fridays Trading

TREND ANALYSIS LLC